The Risks of Too Little Market Diversity

"E pluribus unum," "out of many, one" is a great motto for a multicultural nation like the U.S. For investors, not so much.

Yet, for the past few years, the phrase emblazoned on the U.S. seal has been the perfect description of the markets' odd behavior, courtesy of the Federal Reserve and its counterparts in Frankfurt and Tokyo.

Out of many asset classes, sectors and geographies, one binary outcome:...